Technical Skills Gap Threatens Oil and Gas Industry

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Poaching talent from competitors will not help the global oil and gas industry overcome a significant talent shortage created by a technical skills gap, retirements, turnover and rising labor demand, according to Mercer LLC, which has released an industry workforce survey.

With a surge of professionals expected to retire from the global oil and gas industry within the next five years, 74 percent of organizations surveyed cite a critical technical skills gap; industry sources also noted gaps in management and supervisory skills.

What’s more, two-thirds of oil and gas companies plan to hire talent away from competitors, according to the Mercer Global Oil and Gas Talent Outlook and Workforce Practices Survey. Nearly half of these employers plan to use poaching as their primary talent source, Mercer said. The survey, released this year, used responses received in 2013 from 126 industry professionals, mostly in HR roles.

Far more companies are now “buying” rather than “building” workforces, Mercer said.

“The widely-embraced strategy in the oil and gas industry of poaching from the competition is simply not viable or sustainable,” Philip Tenenbaum, senior partner and global leader of Mercer’s energy consulting practice in Houston, said in a statement. “A more strategic approach to both talent acquisition and workforce management that focuses on innovation and execution is required for those oil and gas industry members who hope to become leaders and separate themselves from the competition.”

The oil and gas industry will add more than 530,000 positions in technical and core professional jobs over the next five years and more than 1.1 million over the next decade, while more than half the world’s largest oil- and gas-producing countries won’t have enough talent to meet the demand, the consulting firm said.

Relatively few companies have a workforce-planning process that provides solutions to close labor gaps, Mercer said.

The market already lacks an adequate supply of skilled candidates and is finding it harder to attract and retain qualified employees. Respondents said their greatest challenge lies in recruiting experienced candidates, especially engineers, the survey found.

Mercer recommends that companies implement holistic talent sourcing and development strategies to attract an adequate labor supply, improve the skills of their existing workforce, and build employee loyalty.

Tenenbaum, in an interview with
SHRM Online, noted that the industry has trouble attracting young people.

“Primarily I think that’s because of the image of the industry versus the reality of the industry,” he said. Young people like high-tech industries and perceive the oil and gas industry as more blue-collar, dangerous and grimy, he said.

“If you were to go to an oil rig you’d probably see as much technology as you would in a hospital laboratory,” Tenenbaum said. The Millennial generation can have long, successful, fruitful technology careers in the oil and gas industry, he said.

The industry needs to change its image through marketing, public relations and “giving young people exposure to the industry,” he added. Some Texas and Oklahoma universities have been working with the industry to change the image, “but for the most part the industry has not really done that to any great degree.”

The industry also has a “knowledge transfer problem,” with today’s 25-year-olds learning in a very different way than the 55-year-olds who typically train newcomers, according to Tenenbaum.

Not only should the industry form partnerships with universities, Tenenbaum said, it should take advantage of the community college system to train people of all ages so companies can gain access to mid- and late-career people, too.

“You’ve got to make the industry more attractive so you fill up the employee pipeline at the early stages,” Tenenbaum said. Companies also can look at skills from adjacent industries, such as the military, he said.

Jeff Bush, president and founder of CSI Recruiting of Denver, said experienced, degreed technical talent—namely petroleum engineers and geoscientists—constitute the main shortage areas.

“Particularly in the U.S. ... there’s just not enough talent to satisfy the demand, and furthermore there’s not enough bandwidth within these companies to hire and train a large roster of new graduates,” Bush said.

He sees the aging population combined with industry expansion as the reasons for the talent shortfall. “The industry has been in reasonably good stead as far as activity level for 10 or so years now,” with new drilling technologies, new basins to find oil and gas, and sustained strong industry pricing, Bush said.

​While those who entered the industry in the mid-1970s through early 1980s are now thinking of retiring, there will not be enough workers left once they are gone: An energy pricing slump from the mid-1980s through the 1990s meant there was very little hiring in the industry, Bush noted.

“As difficult as it is to prioritize succession planning, as difficult as it is to take your senior-level talent and dedicate them to the training of entry-level talent, that is what needs to happen,” Bush said.

The industry is good at providing college internships and hiring the cream of the crop, “but not everyone has a 4.0,” he said. Companies need to look beyond the honor roll and consider students with B averages, he said.

“So much of what makes a petroleum engineer is their hands-on experience,” Bush said. “A 3.0, a 3.3, that shouldn’t preclude you from being able to land a job in the industry, especially if you’ve had some good internships.”

Bush agreed that poaching won’t solve “the great crew change” coming in the industry. “We’re not far off from that.”

Dinah Wisenberg Brin, a former reporter for Dow Jones Newswires
and The Associated Press, is a freelance writer based in Philadelphia.

Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.